It’s 2024, and people are hungrier than ever to increase their income with side hustles. The dream for most is for their side hustle to elevate into a full-time earning income. It has been estimated that 44% of Brits had at least one additional income from a side hustle, which is a huge incline when compared to previous years. With so many avenues for earning through the digital landscape now, there has never been a better time to hop onto the side hustle train.
There is so much available information regarding side hustles. From easy ones that can be balanced around your 9 – 5, to side hustles that promise to elevate your earnings within just a few weeks, choosing which side hustle to pursue is the easy part. The hard part comes when it is time to get logical and measure the profitability of a side hustle.
While following your passion is said to bring infinite opportunities, not everyone has passions, and not everyone can make the needed initial investment to get started. In this blog post, we will share how to measure the profitability of your side hustle in the short term and long term. This is crucial for smart business planning. Starting a side hustle can eventually form a flourishing business, but the correct planning and implementation in the beginning will determine its lifeline. Take a look at the following suggestions:
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Short-term evaluations
The speed of cash flow
Depending on your objectives for your side hustle, a short-term consideration may be the speed at which profit can be generated. Some side hustles may have a quick cash flow return, such as freelance writing, or offering some level of hospitality assistance. Tutoring is another side hustle that will offer your immediate returns, assuming that your customers are reliable with their payments. With this, once you have your business set up you can immediately calculate your average monthly returns when costs and tax is deducted. If your business idea is more intricate and requires a larger initial investment, you need to consider how long you can sustain not making a return.
Initial investment costs
Some side hustles have little to no investment costs. For example, if you are becoming a freelance writer you will simply need to pay a subscription for an outreach service that connects you to businesses that need copywriters. Or, if you are looking to venture into graphic design alongside your 9-5, you may need to pay a small fee for monthly creative tools, and this needs to be factored into your overall monthly business costs. Working this out, in the beginning, is crucial, especially if your costs have the potential to exceed your potential earnings.
Market demand
Short-term profitability can be determined by environmental factors. For example, if you are trying to sell second-hand swimwear on apps such as Depop during winter, you are less likely to make sales than if you were to focus on these products during the summer months. Or, if you were to offer fitness coaching, this service would be highly demanded during the start of the year, in comparison to the end of the year when everyone stays inside for Christmas. Decide whether your business is reliant on seasonality. Businesses that are hybrid and experience little demand fluctuation may be more sustainable when starting up.
Time investment
One of the biggest things to consider when working out the short-term probability of your side hustle is the time investment you have available. Side hustles usually start as a side hustle for a reason. You may have commitments to your current job or need to earn a minimum income guaranteed each month to get by. This may leave you with less time to juggle all of your current objectives around your side hustle.
Depending on the time that will be required to provide your service or products, you need to evaluate what you can realistically set aside for your customers. For example, if you are starting a hair braiding side hustle that takes 3 hours per client, and you only have 9 hours free during the week, what would be your profitability for the month? You need to be prepared for the worst-case scenario, for example, if a client takes longer, is late, or if they cancel the appointment at the last minute entirely. Determine whether this would be profitable for you in the short term and worth the time investment.
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Long term evaluations
Scalability overtime
An important long-term consideration for your side hustle is its scalability. How much finance can you raise and save for future development, and can you scale this business model? For example, if you are offering a niche service that can only be performed by yourself with adequate time allowances, is this scalable? For example, if you have braided hair for some time, what is the timeline before you can open your shop and afford to pay staff? Or could you start an online training academy to cut the costs? Figure out a timeline from start to finish to measure your business scalability, and do your research to estimate its demand over the next 10 years.
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Your interest
As we touched on, a business that you are passionate about can become a full-time income. However, many people find that once they turn their passion into a business, they fall out of love with the process due to the demand. This is normal, but you need to consider your love and interest in the industry you will be looking to break into. This is especially important if you will be offering the service yourself and the job will not be outsourced. A business built through passion will overcome any economic obstacles.
Building a statement brand
If you have identified a niche within the market, you need to make sure that your brand maintains this same niche persona. People do not want to see the same thing from businesses, so your branding long-term needs to develop into something distinguishable against the rest of the noise.
Delayed gratification
A long-term consideration for profitability also requires the openness to delayed gratification. You may be selling a high-value product or service, but if costs exceed profits for the first batch of transactions until you can pay off your debts, you need to accept this. Most businesses fall into negative equity within their first year, and it is important to know that debt is not always bad. For example, if you are offering a complex service such as tracking forex trading scams, you will need a large initial investment into the business to get started and generate qualified leads. You have to be patient and calculate a timeline in which you can forecast when profits can be made.
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To conclude
Overall, measuring the short-term and long-term profitability of any side hustle can be a challenge, but it must be done. Setting out to start a business that lacks a sufficient business plan with short-term and long-term implications is at risk of failure. If the long-term expectations surpass the negativity of short-term sacrifice, it may be worth diving in. However, if you are looking to make a quick lump sum of cash, the short-term positives may be more attractive to you than the consideration of long-term scalability, so it is highly dependent on your circumstances. People who fail to plan, plan to fail!
You may also read: The Importance of Frugality in Building Wealth
Author bio
Amy Jones is a freelance writer from Manchester and has written for many different business publications. With a range of knowledge in the business and investing sector, she is an avid researcher and writer in the field. Having worked closely with a number of different businesses, Amy is now looking to specialize in workplace health and disputes and is currently researching and working closely with different health brands for this
